HSBC weighing bid for Aviva's Asia assets: Sources

Earlier in August, HSBC abruptly ousted chief executive officer John Flint after just 18 months. Chairman Mark Tucker was increasingly at odds with Flint over the CEO's focus on expansion in China.
Earlier in August, HSBC abruptly ousted chief executive officer John Flint after just 18 months. Chairman Mark Tucker was increasingly at odds with Flint over the CEO's focus on expansion in China.PHOTO: AFP

Bank seeking ways to diversify business; deal would bolster insurance presence in S-E Asia

LONDON • HSBC Holdings, which shook up its senior leadership this month, is considering a bid for Asian operations being sold by insurer Aviva as it seeks ways to diversify its business in the region, sources said.

The London-headquartered bank is in the early stages of weighing an offer for at least part of Aviva's Asian business, the sources said.

A deal would help HSBC bolster its insurance presence in Singapore and other parts of South-east Asia.

UK insurance conglomerate Aviva, whose shares have dropped 27 per cent in the last 12 months, confirmed earlier this month that it is examining options for its Asian business as new chief executive Maurice Tulloch's turnaround takes shape.

Aviva's operations in the region could be valued at about US$3 billion to US$4 billion (S$5.5 billion), with an official process slated to kick off later this year, Bloomberg News reported.

Both HSBC Singapore and Aviva Asia told The Straits Times that they will not comment on market speculation.

Others are also considering bids for the Aviva assets, the sources said.

No final decisions have been made, and there is no certainty that the deliberations will result in a transaction, they added.

Aviva's American depositary receipts rose 2.6 per cent at 12.13pm in New York over-the-counter trading.

Meanwhile, the company's London-listed shares rose 0.1 per cent to close at 358.5 pence on Wednesday.

HSBC rose 0.2 per cent to 598.3 pence in London.

Earlier this month, HSBC abruptly ousted chief executive John Flint after just 18 months.

Chairman Mark Tucker was increasingly at odds with Mr Flint over the chief executive's focus on expansion in China, sources close to the matter said at the time.

The head of HSBC's China business resigned that same week, and the bank unveiled a round of job cuts that could eliminate around 4,000 roles.

Hong Kong, where HSBC generates more than half of its pre-tax profit, has for weeks been roiled in protests that have left the business and financial elite increasingly concerned about the city's growth prospects.

The bank's presence in the rival Asian hub of Singapore is also smaller than that of some international competitors such as Standard Chartered.

Aviva has been capitalising on the surging ranks of middle-class consumers in Asia, many of whom are new to life insurance policies.

Singapore is Aviva's largest market in Asia, with its life insurance unit here generating £1.3 billion (S$2.2 billion) in new business and £141 million in adjusted operating profit last year, according to its latest annual report.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on August 23, 2019, with the headline 'HSBC weighing bid for Aviva's Asia assets: Sources'. Print Edition | Subscribe